This is up from the 11.9% annual growth recorded in April, or 1.2% higher, according to figures from the Office for National Statistics (ONS) and HM Land Registry.

On a country level, yearly growth was strongest in Wales where house prices rose by 14.4% to £212,414. Northern Ireland saw the lowest uptick with a 10.4% annual rise to £164,590. 

A chronic lack of supply appears to be propping up house prices as buyers are willing to pay more to secure properties, industry professionals suggested. 

Tomer Aboody, director of MT Finance, said: “With such low numbers of properties coming to the market, it’s not surprising prices continue to rise as buyers compete for limited stock. 

“Getting more properties onto the market is key. A restructure of stamp duty might encourage potential sellers to enter the market knowing that the cost of moving, whether upsizing or downsizing, is lower, and therefore more affordable.” 

Paul McGerrigan, CEO at national fintech broker Loan.co.uk, said: “A dearth of supply, the continued trend toward remote working, the need for extra space and a buoyant buy-to-let market are still outweighing the negative factors of inflation, rising mortgage rates and uncertainty. The question is for how long.” 

Market set to cool 

Karen Noye, mortgage spokesperson at Quilter, said a dip in demand could see a slowdown in the housing market over the coming months, and potentially a reversal of prices coming in autumn when “the true scale of the energy crisis unfolds” .  

She said: “The UK continues to face a severe financial problem and the housing market will face its biggest challenge yet as the cost-of-living crisis takes hold.” 

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “House prices have risen through the roof again, but look a little closer and the foundations are starting to look shakier.  

“Our passion for property has held out against enormous financial pressures for months now, and continues to power higher prices. However, we’re starting to see small changes in the market, which are likely to mean weaker growth in the coming months, especially if interest rates are hiked in August.” 

Coles said on the face of it the market appeared strong despite economic uncertainty, but she said there were signs “things are starting to shift”. 

She said there was still an imbalance in supply and demand but this was starting to ease with Rightmove statistics showing there were 7% fewer buyers in June and 13% more sellers. 

“We’re still seeing a quarter more buyers than the same time in 2019 and 40% fewer sellers, but the gap is closing,” she said. 

She also pointed to the slowing down of mortgage approvals, indicating the tempering of buyer demand amid a rise in the number of properties on the market would prompt decelerating house prices. 

She added: “We’re unlikely to see a straight line downwards from here. The commercial indices are in for June, with Nationwide showing price rises falling back again, and Halifax showing the fastest rate of growth in 18 years. However, over time, we will see price rises gradually trend downwards.” 

Look at the bigger picture

However, Paresh Raja, CEO of Market Financial Solutions, said any predictions of huge shifts in the housing market should be made with caution. 

He added that political and economic uncertainty fuelled speculation that the property market will suffer but “we should be wary of predicting any radical shifts”. 

He said rising inflation and interest rates could affect buyer and seller confidence, but other factors were at play.  

Raja said: “The perennial undersupply of property plays a critical role in keeping prices high, and this is an issue that will take many, many years to tackle. Moreover, we have seen throughout the pandemic that despite a great deal of uncertainty, house prices have risen. This is because many homebuyers and investors often seek out the security of bricks and mortar as an asset to own – a reflection of the long-term trend of property prices rising and rising.  

“That is why we should not be too quick to predict a fall, but instead stay alert to the challenges at hand and focus on make informed, diligent decisions before any property investment.”